Home Depot shares climbed after the retailer reported fourth-quarter earnings that topped expectations, even as revenue declined amid a sluggish housing market.
BNN Bloomberg spoke with David Bellinger, director and senior equity analyst at Mizuho, who said improving sales trends, steady maintenance demand and better cost visibility helped offset macro pressures, including tariffs and elevated mortgage rates.
Key Takeaways
- U.S. same-store sales rose 0.3 per cent in the fourth quarter, exceeding subdued expectations and signalling stabilization in home improvement demand.
- Earnings per share came in roughly 8 per cent above Street estimates, despite a year-over-year revenue decline of about 4 per cent.
- Management reaffirmed fiscal guidance, projecting total sales growth of 2.5 per cent to 4.5 per cent and comparable sales from flat to up 2 per cent.
- A slow housing turnover environment and mortgage rates near six per cent continue to weigh on large renovation projects, though maintenance spending remains steady.
- Tariff-related cost pressures are being managed, with like-for-like item inflation running at roughly three per cent and store expansion plans continuing with 15 new locations this year.
Read the full transcript below:
ROGER: As we discussed, Home Depot shares are rising after the company reported fourth-quarter earnings that beat estimates for the first time in a year. Joining us now for analysis is David Bellinger, director and senior equity analyst at Mizuho. David, thanks again for joining us. Initial reaction to the report?
DAVID: Great. Thanks for having me on. This was a good, not great quarter from Home Depot. You had same-store sales in the U.S. up fractionally, about three-tenths of a percentage point. So not all that much, but expectations were very low going into the print. We were looking for a negative number, and much of the Street was as well. What you can see here is that there are some signs of life in the home improvement market. It has been more stable than anything. We had a lot of winter weather activity throughout the eastern seaboard of the U.S., even the southern U.S., in mid- to late January, so that perked sales up a bit. It is almost as if the demand environment has been stable and there is a case for gradual improvement as 2026 progresses. I think that is what has the stock up a little more than three per cent today.
ROGER: And what is that case? What is giving you some optimism?
DAVID: The biggest piece here is this digestion period from the peak stimulus-era spending. Think about 2021 — a lot of money sloshing around in the U.S., and a lot of that went to the housing sector and the home improvement sector. Now you are getting to this sort of refresh cycle. We think a lot of that digestion is about to bleed through. You also have an administration that is very focused on getting the housing market going again. There are talks about 50-year mortgages and building a million new homes. You also have rates coming down, a new Fed chair coming in very soon. You could see mortgage rates going a tick under six per cent. That is not a magic number that suddenly helps existing home sales pick up, but anything with a five handle on it — in that five per cent range — should definitely help. The administration understands the importance of housing and all the add-on spending that comes after buying a home — furnishing it, fixing it up, maybe buying a vehicle, having kids. It opens a gateway to spending, and I think they have that in mind.
ROGER: And any potential headwinds? There is some reason for optimism, but what could be potential headwinds?
DAVID: The broader conversation in the market is around anything AI-related. How does AI affect the broader economy? Are we going to see job losses or income levels go down? How does that affect the housing market, which is already somewhat unaffordable in the U.S.? There are a lot of crosscurrents. We think Home Depot does have steady demand. Even if homes are not turning over, you have a lot of maintenance activity. There are a lot of business lines that keep the lights on. They have also rolled out more digital tools, including an AI shopping agent within their app and website. We think that is driving more research on their digital properties, better conversion and perhaps spurring more do-it-yourself projects. So they are moving in the right direction amid this stable demand environment.
ROGER: With this report and what they are projecting for the year, does it change anything about the 15 stores they plan to open? They opened 12 in 2025.
DAVID: They have 15 new stores coming. Home Depot has also made some larger-scale pro acquisitions. You might count roughly 50 additional locations from that subset, but that part of the story has been somewhat overlooked. They have more than 2,000 stores in the U.S. They have not grown the store base that much lately, but you are on a roughly five-year pace to add about 80 stores. That could contribute incremental growth, but the company is really about productivity. That has been the hallmark of the Home Depot story. Each unit continues to drive higher sales productivity, and that is where you are seeing much of the earnings growth.
ROGER: And finally, tariffs. With what has been going on the last couple of days and what may unfold with CUSMA, what kind of impact is that having? Have they adjusted to it?
DAVID: There are a lot of moving pieces. Some tariffs have gone away and others have been quickly replaced. Home Depot sources more than half of its goods from inside the U.S., but there is exposure elsewhere, including Canadian softwood lumber, where tariffs have increased. It is a slippery slope trying to navigate tariffs without taking too much price. I think they have handled it well so far. On their earnings call, they said most of the tariff-related pricing has already flowed through, and they are seeing inflation on like-for-like items of around three per cent. They have strong visibility into product costs when goods arrive in the U.S., and that helps them manage the pricing burden.
ROGER: We will have to leave it there. David, thanks as always for joining us.
DAVID: Thank you.
ROGER: David Bellinger, director and senior equity analyst at Mizuho.
---
This BNN Bloomberg summary and transcript of the Feb. 24, 2026 interview with David Bellinger are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
